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Initial public offerings, like all historical events, never repeat themselves, but they follow certain patterns. The filing last Thursday of the eagerly awaited initial public offering by social-media titan Twitter showed growth similar to
Facebook's
FB -1.1779554059739168%Facebook Inc. Cl AU.S.: NasdaqUSD82.215
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. But there were also signs the company is a little early coming to market, just as Facebook was when it came public in May 2012.

In the case of Facebook (ticker: FB), it had to prove it could "monetize" usage on mobile devices, having no mobile-ad revenue at all when it went public. Twitter, by contrast, has to prove it can be profitable.

Twitter has a good story regarding mobile, with 75% of users coming from mobile devices and over 65% of revenue coming from mobile ads. And revenue overall is growing nicely, more than doubling in the quarter ended in June. But the profit margins are lower than some might like, and based on declining prices for ads, it seems that Twitter is still figuring out how to wring more dollars out of advertisers' budgets.

The company made $253.6 million in revenue in the first half of this year, and lost $69.3 million. Its profit margin before depreciation, amortization, and taxes is just 8% in the most recent quarter, way below Facebook's 35%.

"At the time of Facebook's IPO, they were facing a huge secular change in their business, which was: How do you monetize mobile?" explains Victor Anthony, who follows Facebook for Topeka Capital Markets, and rates its shares a Buy. "That's not an issue for Twitter. The issue is: You have an unprofitable model, and how are you going to drive it to profit?"

Twitter is "in investment mode," says Brian Nowak, who follows Facebook for Susquehanna Financial Group, and rates its shares Hold. "They have taken a lot of steps to bring more advertisers to the platform, to build out new ad units, to roll more ad units onto mobile, and those are all good things."

Of particular concern, though, is Twitter's disclosure that ad rates on a per-user basis fell 46% in the June quarter. Some of that is because the company actually lowered the minimum bid price, and some of that is because inventory rose. What that means is that the number of ad slots the company had available to sell expanded greatly, but it didn't lead to a proportionate increase in ad buying.

That's not entirely surprising with an emerging category of advertising, of course.

"I would expect prices to decline with expanded inventory when they are experimenting with advertisers," says Nowak. "If an ad buyer has a million dollars to spend on Twitter, and suddenly the available inventory increases, it's not like that budget is going to rise instantly."

Of course, one can ask why Twitter is "experimenting" at this stage in its development. One answer is that it has deliberately held off on milking money from its swelling usage. That's the conventional wisdom in the Internet world: Let usage grow before blasting the audience with ads, lest you kill the goose.

BULLS ARE INDEED INCLINED to be focused on growth, which Twitter has, even if some of the data released Thursday didn't completely live up to expectations. Twitter's total growth in active monthly users in the June quarter was not as fast as some had expected, up 7% from the prior quarter. In the comparable quarter in the history of Facebook's user base, its user count rose 23% quarter to quarter, observes Topeka's Anthony.

The total number of those monthly users, moreover, is only 218 million—more than Instagram, a property of Facebook, at 150 million users, but not dramatically more for the six-year-old social-networking company.

If the numbers seemed a tad low given the constant references to Twitter in the media, it may be because the media is so obsessed with Twitter that it tends to paint the service as ubiquitous. But the bulls will point to the fact Twitter's growth is still better than Facebook's is today, even if it's not better than Facebook was in years past.

The 218 million monthly user count does represent 44% growth, year over year, which is more than the 21% growth Facebook had last quarter.

Some Facebook investors could dump shares as a source of funds to buy the higher growth rate Twitter represents.

And a smaller-than-expected user count, while perhaps disappointing initially, only leaves room for upside, in some people's view. "Twitter points out that 1.2 billion people have smartphones around the world, while Twitter has only 218 million users," observes Kevin Landis, who manages the
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fund (SVVC), which holds a million shares of Twitter. "What that means is that the glass is not half full, it's one-sixth full," he quips, ever the optimist. "I love the fact they've only started adding international users, and only started monetizing that."

HOW MUCH SHOULD BE PAID for eventual upside? With about 600 million shares outstanding, including restricted stock grants, at an estimated price of $25, the company would be worth around $15 billion. That would be roughly 15 times the $1 billion in revenue analysts think the company could bring in next year. That multiple is not out of sync with that of Facebook when it went public at 14 times revenue, notes Topeka's Anthony.

Growth issues and valuation aside, one overlooked disclosure in the Twitter prospectus is the huge amount of restricted stock that the company has issued to employees. So far this year, Twitter has issued about 46 million shares of restricted stock worth $875 million, or about $435,000 for each of its 2,000 employees. The value of that stock dwarfs Twitter's $316 million in expenses in the first half of 2013.

It appears that Twitter's stock-based compensation expense could total about $300 million next year, which could swamp any profits that Twitter may earn. But Wall Street likely will strip out the costs, pretending that restricted stock has no value because it's not a cash expense.

Firsthand's Landis is inclined to give the company a pass on the large issuance. "Increasing your float by 10% is not something you can do every year, but for one year it might be appropriate."

As Twitter heads to its roadshow, expect to hear a lot of questions about how the company can boost those profit margins and get more advertisers to open their wallets. But you can also expect a lot of goodwill for the company's growth, even if the stock costs a mint.